1. Payments
1.1 Payments NTR has picked up smartly (@8.9bps) driving up the segment profit to 18.6 crore from 10.4 sequentially and 4.94 crore YoY.
1.2. Management gave strong commentary on the payment business and expect to drive the NTR to 10+ bps by FY25.
1.3 Tappay is commercial and management re-iterates guidance for 100K merchants for Q4FY23 and 1mn merchants by Q4FY24. Refuses to provide any specific numbers on turnover, volumes etc.
2. Platforms
2.1 Platform profits on the other hand have declined to 15.65Cr from 17.76 sequentially and 23.43 on YOY basis.
2.2. While commentary on GEM is strong particulary for Q4 (which always sees huge volumes) - the fact that the contract terms are re-negotiated to cap payout on higher value transactions and possibly large discounting on Govt to Govt orders - have taken out all cream from the GEM business (which can be seen from the nos above)
2.3 Presentl GEM contract runs out in Dec’23 (from the new RFP). Little/no hope for extension of the present contract.
2.4 The new RFP payout is based on Fixed + Variable model. The variable model is based on no of transactions rather than value of transactions and has a deep discounting scale model built in. This essentially takes out a lot of charm and the payouts are likely to be significantly lower then current payouts even at higher volumes.
2.5 Effectively, extra-ordinary returns from GEM will no longer be possible in the new contract. Even in the present one Q4FY23 is the only quarter in which some windfall is possible (which also is severly curtailed due to capping). Modelling likely nos is no longer possible.
3. Others
3.1 Trust Avenue not likey to see any revenue for next few quarters. No clear answer on timeline and potential. Till something concrete comes out, I would take 0 for FY24 on this account.
3.2 New International forays - Saudi is operational. No specific updates on any other geography.
3.3 No updates on NEU license.
Effectively:
Platform business will get (maybe already is) discounted substantially.
Payments business is the key to future profitability beyond Dec23. So valuation of Infibeam will need to follow that. Within Payment EBITDA growth will be driven by NTR improvements, International forays and contributions from TapPay.
Q4 will possibly see a good uptick on GEM perforamce and continued recovery in Payments. If some part of the govt payout on UPI transaction can thru in Q4, that will add to it, else it will add to Q1 FY24 or whenever it happens.
In short, back to being a being a 2 wheel drive car, than the potential 4 wheel drive.
Hi,
Anyone still tracking this? Any idea if the recent run-up is due to any fundamental reasons and sustainable? Or just a trading move that can be sold into?
Disc: Invested and seeking opinion on whether to remain so.
Infibeam Avenues Ltd, a listed fintech company, announces its strategic foray into the capital markets and digital lending software market by acquiring a significant 49% equity stake in Pirimid Fintech, investing Rs 25 crore to solidify this strategic partnership.
I saw this notification from Infibeam Avenues today:
If I understand this right, basically, Infibeam Avenues is giving guarantee of 140 Cr against term loan drawn by Infibeam Projects Management Pvt Ltd which is into real estate.
I am wondering if this should be a concern. The avenues business, a Fintech company, serving as a guarantee for real estate subsidiary. Is this common? Can the more informed members please throw some light on this?
Thanks.
Disc: Invested from lower levels and wondering what to do with this stock.
As per disclosure made by the Infibeam Avenues, its subsidiary Infibeam Projects Management Pvt Ltd is enaged in the business of providing software and pre-built infrastructure, tools and resources to fintech startups (refer attached). So, it is not strictly engaged in pure real estate operations. Let us wait for the next concall and get more clarity directly from the management in this regard.
Infibeam Avenues delivered strong Q1 FY25 results with double-digit year-over-year growth in net revenue (20%), EBITDA (25%), and PAT (59%). The company’s focus on improving take rates in payments has paid off, with net take rates increasing to 11.2 basis points, up 33% YoY. Management is optimistic about future growth, particularly in value-added services and international expansion.
Strategic Initiatives:
Acquisition of Rediff (dot) com: Infibeam plans to acquire a majority stake in Rediff (dot) com to leverage its large user base (55 million monthly visitors) for cross-selling financial products using AI.
AI Focus: Creating a new subsidiary for AI operations, focusing on fraud detection and prevention in fintech.
International Expansion: Intensifying focus on international business, aiming for 12-15% contribution to net revenue in the next two years.
TapPay Launch: Introducing CCAvenue TapPay, a new payment device for merchants.
Value-Added Services: Expanding into financial product distribution, aiming for 2-4% revenue contribution this year, growing to 7-10% in coming years.
Trends and Themes:
Increasing focus on AI and cloud services in fintech
Expansion into value-added financial services
Emphasis on improving take rates rather than just transaction volumes
Growing importance of data localization and regulatory compliance
Industry Tailwinds:
Rapid growth of digital payments in India (70% in 2023, estimated 45-50% in 2024)
Government and regulatory support for digital payments and less-cash economy
Increasing adoption of UPI and other digital payment methods
Industry Headwinds:
Intense competition in the digital payments space
Regulatory challenges and compliance requirements
Data localization mandates in different countries
Analyst Concerns and Management Response:
Concern: Slow growth in TPV (Transaction Processing Volume)
Response: Management emphasized focus on profitable growth and improving take rates rather than just TPV growth.
Concern: GeM (Government e-Marketplace) revenue recognition
Response: Management stated that GeM continues to use their platform, but revenue recognition is pending due to ongoing arbitration.
Concern: Rationale for Rediff acquisition
Response: Management highlighted Rediff’s strong brand, large user base, and cloud capabilities as key synergies for Infibeam’s growth strategy.
Competitive Landscape:
The company faces competition from other payment aggregators and fintech players. However, management believes their focus on improving take rates, expanding into value-added services, and leveraging AI will differentiate them in the market.
Guidance and Outlook:
For FY25, the company projects:
Revenue growth of 25-30%
EBITDA growth of 10-20%
PAT growth of 20-35%
Capital Allocation Strategy:
The company is investing in strategic acquisitions (e.g., Rediff (dot) com), AI capabilities, and international expansion. They are also focusing on improving profitability through better take rates and value-added services.
Opportunities & Risks:
Opportunities:
Expansion into value-added financial services
Leveraging AI for fraud detection and new product development
International expansion, particularly in the Middle East
Risks:
Regulatory changes affecting the fintech sector
Intensifying competition in the digital payments space
Execution risks in new ventures like AI and international expansion
Regulatory Environment:
The company has obtained a payment aggregator license from RBI, which provides a strong competitive advantage due to high entry barriers. They are also complying with data localization requirements in different countries.
Customer Sentiment:
Management reported strong merchant acquisition, adding 230,022 new merchants in Q1, averaging 2,550 merchants daily. This suggests positive customer sentiment towards Infibeam’s offerings.
Top 3 Takeaways:
Strong focus on AI and cloud services to drive future growth
Strategic acquisition of Rediff (dot) com to expand user base and cross-selling opportunities
Emphasis on improving take rates and expanding into value-added services to drive profitability
Is anyone tracking INFIBEAM?
Operating business is going good, but company insider’s are continuously selling.
Here is response of Vishal mehta MD of infibeam, can anyone respond what’s his thought process or something is fishy? SS from Q2 transcript
